The car bug that bit the Nalley family back in 1918 has now spread through four generations, and C.V. "Jim" Nalley III (BBA '66) is the man who made Nalley the most profitable auto group in the nation's most competitive car market

B Y - K E N T - H A N N O N

im Nalley's monthly brown bag lunch for upper-level managers is scheduled for noon and among the first to arrive at company headquarters on West Paces Ferry in Atlanta is Roy Alexander, driving the hot car in the automotive industry—a jet-black Infiniti G35. Next to arrive is Dave Coberth in a Lexus LS430, followed by CFO Joe Shine in an Acura RL. Harvey Jackson also drives an Acura, and here comes Mike Arline in a Chevy Suburban big enough to fit the boss's little Audi convertible in the back seat. The only non-conformists in this parade of expensive wheels are the two youngsters in the managerial group, brothers Clay and Slater Nalley, who could be driving something like Dad's A4, but who opt for GMC and Chevy pickups instead.

As you may have guessed, or known already because their name is so familiar, the Nalley family is in the automobile business.

"It started with my grandfather, C.V. Nalley Sr., who was a traveling dry goods salesman . . . a rounder is what they called them back then," says C.V. "Jim" Nalley III (BBA '66), who is president and CEO of the Nalley Cos. and a former chairman of the UGA Foundation. "In 1918, he traded a horse and buggy for his first automobile—and got bitten by the car bug."

C.V. Sr. was the Dodge Brothers distributor for northeast Georgia, working out of Gainesville. His son, C.V. Jr. (BSC '36) sold his dad's business and went into automobile finance before opening car dealerships of his own in Jasper, Gainesville, and Atlanta, beginning in 1942. Having worked at Nalley Chevrolet since fifth grade, Jim convinced his dad and general manager Clint Morton to help him buy a small trucking franchise in 1971. It was located on Stewart Avenue, just down the street from his dad's place. Counting Clay (M '95) and Slater (who went to Ole Miss) and their little brother Street (BBA '01), who already occupy important positions in the organizational chart, the car bug has now spread through four generations of Nalleys. The company currently holds 21 franchises that do business in 14 dealership locations, all in metro Atlanta except for a dealership in Brunswick and another in Fairfax, Va. Besides the seven makes represented at lunch, there's also Nalley Honda, Nalley Chrysler & Jeep, Nalley Auto Mall-Brunswick, Fairfax Auto Mall, plus several brands of Nalley Trucks, and the two newest members of the family: Nalley Jaguar and Nalley Infinity.

"Our goal," says Jim, "is to eventually have a dealership for every luxury production automobile in Atlanta."

Residents of Roswell probably think that day is already here, what with four Nalley dealerships located within five minutes of each other in a section of town just west of Highway 400 that could be renamed Nalleyville.

This is not to say that the Nalley Cos. sell more cars than anyone else in Atlanta.

"We strive not to be the highest volume group in Atlanta," says Jim, "but the best and the most profitable."

Being part of the $5 billion Asbury Automotive Group, the nation's third-largest chain of dealers, gives Nalley considerable clout with lenders, who jump at the chance to finance a venture like the new 75,000-square-foot Lexus dealership that Nalley is building on an old Service Merchandise site near the I-75/I-285 interchange in Marietta.

"It will be a state-of-the-art facility," says Jim, "with room for 400 cars, compared to, say, 250 at Nalley Chrysler-Jeep in Roswell."

But the topic of today's brown bag lunch isn't as sexy as a new Lexus dealership. For two hours, Jim and his lieutenants sort through "work-in-process" problems that end up as writeoffs. Most of the conversation is unintelligible to anyone outside the car business. It has to do with the company paying technicians for service and body shop work, but never getting reimbursed because the customer never picks up the car or, for one reason or another, doesn't pay for the hours charged.

"The automobile business looks pretty glamorous from the outside, particularly if you're buying," says Jim. "It starts when you're a kid collecting toy cars and trucks, and I don't think the male side of the population ever loses that fascination. You remember the first car you ever had and the car you drove to the drive-in with your girl friend . . . or at least I do!"

No guarantees for boss's sons o brothers Clay, Slater, and Street, who represent the fourth generation of Nalley men to work in the family business, cars and trucks have been part of their daily lives since childhood. "I can remember my dad bringing a huge tractor trailer to my birthday party when I was 4 or 5," says Clay. "We put 10 kids in the sleeper compartment alone. That was fun." But expensive cars never seemed that glamorous to the Nalley boys—which could explain why all three drive pickups. "Cars are a commodity . . . it's the way we make our living," says Clay (M '95), who, at 31, is the oldest of the three brothers and one of three vice presidents who assists his father in running the $600-million-a-year company. Slater, 30, is used car manager at Nalley Infiniti, and Street, 25, is enrolled in the company's management trainee program. As early as age 12, Clay knew he was destined to work for his father—and perhaps one day run the company. But his brothers have the same opportunities, and each knows there are no guarantees just because you have the right bloodlines. "I have the oldest son mentality," says Clay. "I want to do things as well as they can be done. But I've always had to prove myself because I'm the boss's son." Like his dad before him, Clay washed cars after school and spent his summers working at Nalley Chevrolet on Stewart Avenue in Atlanta, changing oil, manning the lube rack, and getting a lot of grease in his fingernails. None of Jim Nalley's sons has been allowed to go to work for their daddy right out of college. Clay went up to Charlotte and sold Chevrolets for NASCAR owner Rick Hendrick. "I was only there for four months back in '95," says Clay. "But in one of those months I sold 27 cars—and when Mr. Hendrick told my dad how well I was doing, my dad said it was time for me to come home and go to work for Nalley." Clay and Jim get along great. ("My dad is my hero," says Clay.) But there was an interesting interchange recently when father asked son if $1.7 million in renovations at Nalley Honda in Union City would be completed by April. "If we start in April, we'll be done in August," said Clay. "Why?" said Jim. "I know you're getting old, Pop," said Clay, with a small grin on his face. "But you can't do $1.7 million in construction in 60 days." "I saw the timeline and I thought the last date on it was April," said Jim. "That was for the prep work," said Clay. Jim groused a bit more, but it was evident to both men that the teacher had done such a good job that the pupil knew more in this instance than the teacher did. "Okay," said Jim, with a smile. "We'll re-do the timeline."

But selling cars is a whole different animal.

"That work-in-process problem we were discussing today will eat you alive if you let it get out of hand," says Jim, "and it's just one of 80 different financial accounts we have to keep tabs on every month."

A week earlier, while recounting the history of the family business, Jim was interrupted by a visit from his lawyer, John Hines, who brought a pile of important papers for him to sign. Actually, interrupted is a misnomer because, with nary a break in the 86-year chronology, Jim inked the sale of a $15 million dealership with as much ceremony as an ordinary person writing a rent check.

"When we first started doing deals like this, we didn't know what we were doing," says Hines, who, like most everyone who comes in contact with Jim Nalley, is amazed at how the man accomplishes virtually everything he sets out to do—and yet, for the most part, is able to keep the working environment nice and breezy. The essence of Jim Nalley, says Hines, is how nice a guy he is and how savvy he is about the car business.

"I remember times when Jim would go out and buy a dealership when he didn't necessarily have all the approvals in place," says Hines. "We'd be talking, in the abstract, about making such and such a deal. So Jim starts scribbling some figures on a napkin at lunch—and, before you know it, we've bought ourselves another dealership."

iven the level of success Jim Nalley has enjoyed selling cars and trucks, it would be logical to assume that he just naturally wanted to work for his father when he grew up. In the car business . . . yes, says Jim. But for his father . . . no, though they got along fine away from the dealership.

"As a kid, I went to work with my dad," Jim recalls. "I palled around with the mechanics and the parts guys, I washed cars, and I was the car expert at school after we got out of bicycles. But I didn't think I could work for my father long-term."

Quick trivia quiz.

Q: What did Jim Nalley do for a living before he became an automobile magnate?

A: Ice machine salesman.

"And I was a very happy ice machine salesman until one day when my wife said, 'You ought to go to work for your father . . . at least try it.' So, in 1966, I went to work for my father for half the pay—$600 a month—and twice the hours."

The arrangement worked out because Clint Morton became Jim's mentor. Tall, rangy, and a real character, Clint also taught him to hunt and fish.

"It worked because he wasn't my father," says Jim. "Dad was more of an entrepreneur than a car dealer. He loved doin' deals, but didn't like day-to-day management. He'd buy anything that was standin' still. He bought a Florida motel while we were staying there on vacation, and thankfully he got more deals right than he screwed up!"

When it came time for Jim to go off on his own, C.V. Jr. and Clint looked around for a car dealership for him. But nothing seemed right until Chevrolet announced that it was coming out with a heavy truck line. With the two older men as money partners and their 29-year-old protégé contributing the sweat equity, Jim started selling 18-wheelers.

"I didn't know one truck from another, but there wasn't as much competition in trucks," says Jim, who in 1971 became the second dealer on the east coast to sell Peterbilt rigs. Peterbilt is the Cadillac of heavy trucks, and it immediately began to eat into the monopoly that Mack had long enjoyed east of the Mississippi.

That same year, C.V. Jr. put Georgia's first Honda in his showroom on Stewart Avenue. At the time, Chevy's smallest car, the Vega, had a base sticker price of $2,250, whereas the two-cylinder, 36-horsepower Honda sold for $1,395.

"You couldn't give them away," Jim recalls. "At one point, Dad had 150 Hondas sitting on the lot."

Americans' attitude toward Japanese automobiles began to change following the Arab oil crisis of 1973-74. But as Jim's medium and heavy truck business grew exponentially, his dad's Chevy and Honda business had its ups and downs. In '73, Jim sold the Hertz Corp. 7,000 new trucks for rental and leasing, but what really put Jim Nalley on the map was his ability to dispose of 4,000 used Hertz trucks. "We had used trucks double-parked all over the country," says Jim, "but at the end of three years we had unloaded all of that inventory."

Jim's truck business was soon No. 1 in the U.S., and in 1977, with C.V. Jr. and Clint thinking about retirement, Jim bought out their interests in Nalley Chevrolet and Honda —but not without a tough round of negotiations.

"It's hard for an entrepreneurial type like my father to cut the cord —even if they're selling to their son," says Jim. "Being on my own in the truck business, I didn't have to listen to that 'You can't do it that way' stuff. I felt like I had an advantage over guys who just take over their father's business without first being on their own. I did it the hard way, but I saw a different way to do things."

Different, as in a new building for Nalley Honda just down the street, and different, as in a younger staff with a can-do attitude—all hand picked by Jim.

At one point, Jim owned car and truck dealerships in Newnan, and in Charlotte, but he eventually sold both of them. In 1986, 14 years after his father opened the first Honda dealership in Georgia, Jim made Honda's luxury line available to Georgians by opening the first Acura dealership in the state.

nside Jim Nalley's personal office in Buckhead, a constant battle for artistic supremacy is being waged between a Depression era Thomas Hart Benton that hangs on one wall, the Chinese porcelain dragons that occupy the mantel, and the Georgia Bulldog artifacts that glare back from Jim's desk area.

"The story of how my blood got so red is that my dad was the biggest damn Bulldog you ever saw," says Jim. "Going to Athens was the biggest thing in my life, and football Saturdays are what we lived for. I played midget football growing up in Gainesville, and when I was 11 or 12, I even got to play a game in Sanford Stadium against the Athens Y. Never will forget that . . . or my dad taking me on the team train to play Villanova in 1953. I got to meet Coach Butts and there must've been 100,000 people in that stadium in Philadelphia. We won 32-19. Never will forget that either."

Recruited to the UGA Foundation board by Atlanta developer Tom Cousins (BBA '52), Jim got involved in 1987 just as the University was about to hire Charles Knapp as president. He and Knapp became close friends, and logged a lot of miles flying around the state on behalf of the University Trust, which was the forerunner of today's Partners Program. From 1998-2000, he served as chair of the foundation board.

"Under Mike Adams' leadership," says Jim, "we created the UGA Real Estate Foundation—which was a very important step in terms of pulling together private and public capital in order to speed up the renewal and expansion of our wonderful campus. And I volunteered Jack Rooker (BBA '60), who is absolutely the finest individual we could've coerced into serving as Real Estate Foundation chairman."

Jim still serves as a managing trustee of the foundation and is an at-large member of the executive committee. He sees building a larger endowment as the most important step UGA can take to guarantee strength for the future.

here's a plaque on Jim Nalley's desk that reads "Underpromise . . . Overdeliver." He gives one to each new general manager he hires and says the key to overseeing an automobile empire with 80 business accounts, 14 dealerships, and 1,200 employees is to hire good people.

"You can't do anything without good people, much less grow," he says. "Our most precious and valuable asset, by far, is our people."

To make sure they hire the best they can find, Nalley does what Home Depot and a lot of today's big corporations do: they test applicants for drug use and do background checks for criminal records. If that sounds a tad Big Brotherish, it is also why Nalley has such faith in its people. To help keep employees healthy and happy, there's a psychologist on call. The company also sponsors motivational talks, company picnics, and parties.

Confident in his work force, his operating systems, and his products, Jim Nalley does something that few CEOs do these days.

"I answer my own phone," he says matter-of-factly. "And the truth is, I have the time to do it because we don't get many complaints. But if the customer has taken his or her time to go through a department manager and a general manager and is still not happy, the fact that they can get through to me means a lot to them."

Nalley's No. 1 goal is keeping the customer happy.

One of the ways the company accomplishes this is with the "10 foot rule." As the name suggests, any Nalley employee who comes within 10 feet of a customer must say hello and ask if they can be of service. And in the tradition of restaurants where every wait staff person is your server, no matter which table they're directly responsible for, Nalley mandates that, regardless of department, any employee who encounters a customer with a problem must make that problem their own and attempt to resolve it in the most appropriate and expedient manner.

The flip side of the "10 foot rule" is the don't-get-in-the-customer's-face environment that exists at Nalley's luxury car showrooms. At Nalley Lexus, for example, on Mansell Road in Roswell, the lobby is so tranquil and Ritz-Carlton-like that customers are tempted to ask the receptionist for a double room with turn-down service. The ceramic tile shines like glass, the wood paneling suggests you ought to be ordering a brandy, and, despite the tony collection of gleaming Lexus automobiles, the sales staff remains in the background, oftentimes out of sight.

"Our customers may browse and enjoy looking at our automobiles as long as they like," says Nalley Lexus GM Bill Morton, whose dealership also includes a guest lounge, a business lounge, and a Lexus store that resembles a country club pro shop. "When they're ready to talk to a sales person, we assume they'll ask the receptionist."

Another thing that makes Nalley special is its service areas, which have tiled floors and are clean enough for one of those company picnics.

"You'll never see a drop of grease in our service area," says Morton, whose service technicians are graded on a daily basis for monthly bonuses, "and it's basically the same throughout the Nalley company."

s car towns go, Atlanta is the most competitive in the country. Usually compared to San Francisco because both cities have large yuppie populations with fickle tastes and insatiable appetites for new cars, "Atlanta has more dealers per capita than any city in America," says Jim Nalley. "Period. End of story."

Atlanta is very foreign-car intensive, with Honda the most dominant nameplate. It's also "over-dealered," says son Clay (see sidebar). "Chrysler will be enlarging its stores, but also cutting back on the number in the next few years."

Nalley, on the other hand, will be adding dealerships.

"I'd like to see us operating Mercedes, Volvo, and BMW stores," says Jim, while posing for a magazine cover in front of Nalley Lexus. As the photo shoot ends, a young man pulls up in a Toyota pickup, rolls his window down, and says he wants information about Lexus' small SUV line.

"Do you work here?" he asks Jim.

Instead of saying, "I'm the president and CEO" and passing the young man to one of the sales people inside, Jim observes the "10-foot rule" and the make-it-your-problem clause.

"What can I do for you?" he says.

"Do you know when the new Lexus RX330 will be out?"

"It will be here in March," says Jim.

"Do you know what it will look like?"

"The body shape will be a little different than the RX300 and a little more aerodynamic."

"Do you know what the price will be?"

At this point, the president and CEO reaches into the pocket of his pin-striped suit, writes the name of the new car sales manager on the back of his business card, and hands it to the young man in the Toyota pickup.

"This is the person who can give you that information," says Jim, who has just made a new friend for Nalley Lexus.

n 1986, Business Atlanta did a cover story on Jim Nalley, who still has the same trim build and full head of hair he did back then, although he's gone gray on top now that he's arrived at the big 6-oh. When that story appeared, the Nalley Cos. were No. 6 on the Business Atlanta Top 100 List, with sales of more than 200 million.

"If he's just started," read the story, "what will Jim Nalley's empire look like in 2005?"

Well, with two years to go, the Nalley Cos. have more than tripled their '86 sales figure to $618 million in 2002.

The headline on that Business Atlanta story was "That'd be Nalley" in reference to a 1980s radio and TV ad campaign that Jim says has remained the company's unofficial slogan and buzz phrase ever since. "I don't know why," says Jim. But in a business where name recognition can be a company's most important sales advantage, he's not complaining.

"I was at the Atlanta airport the other day coming back from London," says Jim, "and to get through customs you have to hand them a declaration form. The customs agent looked at my name and as he handed the form back to me, he smiled and said:

"That'd be Nalley!"

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